Asian markets climb as Fed soothes nerves

SINGAPORE — Asian share markets mostly ended higher yesterday, lifted by the steep overnight rally in United States stocks after the Federal Reserve sounded upbeat on the world’s largest economy and pledged to be patient over interest rate increases.

“Based on its current assessment, the committee judges that it can be patient in beginning to normalise the stance of monetary policy,” the Fed said after its last policy meeting for the year. Significantly, the central bank said it viewed that statement as consistent with its previous language that it would be a “considerable time” before it hiked rates.

The change in guidance is another step in the Fed’s plan to exit from the loosest monetary policy in its 100-year history. The dovish tone helped lift the Dow Jones Industrial Average 1.7 per cent on Wednesday in New York.

“It received a positive response from investors,” Jakarta brokerage Trimegah Securities said of the Fed statement in a note to clients yesterday, adding that the market had anticipated more aggressive remarks from the central bank after the US posted strong economic data in recent weeks, such as the faster-than-expected drop in unemployment.

The global market jitters of recent days also subsided somewhat as oil prices stopped plunging, helping Russia to stabilise the rouble.

Mr Satoshi Okagawa, Sumitomo Mitsui Banking Corp’s global markets analyst in Singapore, said: “The improvement in sentiment owes a lot to the fact that falls in oil prices and the rouble have abated.”

Japan’s Nikkei-225 stock index led gains across the region yesterday with a 2.3 per cent jump, its best performance in more than six weeks, as the yen slid 1.9 per cent to 118.86 per US dollar. Hong Kong’s Hang Seng Index rose 1.1 per cent, the Jakarta Composite Index added 1.5 per cent while Singapore’s Straits Times Index gained 0.5 per cent.

Bucking the trend, China’s Shanghai Composite Index fell 0.1 per cent as subscriptions for the biggest new share sales of the year locked up funds. Investors will probably place up to 3 trillion yuan (S$635 billion) of orders for 12 initial public offerings from now until next Thursday, estimates by Shenyin & Wanguo Securities showed.

In the oil market, benchmark Brent crude rose US$1.37, or 2.2 per cent, to US$62.55 a barrel in afternoon trade on London’s ICE exchange, as companies cut upstream investments in reaction to a near-halving of prices since June. In Moscow, the rouble was hovering at around 62 to the US dollar, well off the low of 80 on Tuesday. AGENCIES